Why Hong Kong's property market is skeptical over completion target for flats

Is the 36% target really possible?

In this year’s policy address, it was mentioned that in the short-to-medium term, the government has raised a completion target of 18,500 private flats per year over the next three to four years, up from last year’s target of 13,600 units.

According to a release from Colliers, the government has lifted its completion target 36%. However, the government does not have total control over the supply situation, as the effective supply at the end of the day – the launch date, is very much dependent on developer’s timelines.

The release noted that the market is skeptical as to whether the target can be met over the next few years and do not expect any drastic increase of new housing supply over the short term.

Here's more from Colliers:

A total of 12,293 new private residential units were completed over the first ten months of 2014, according to Buildings Department, which is below the primary sales absorption rate of 14,000 units in 2014.

There is no immediate solution to the current tight supply situation and demand will continue to build up in the market before ample supply becomes available.

One way to significantly boost new supply is via the development of more new towns and residential developments above railway projects.

To make concrete efforts on the housing front, the market is hoping that the government will update the progress of future housing supply in a timely manner so as to increase visibility of the pipeline, as well as be able to add large scale sites to its land bank.

This will help reduce rush purchases, as prospective buyers believe the supply target cannot be met and as a result, decide to buy a home now, which then pushes residential prices to a record level.